The government�s declaration to raise the salaries of government employees so amply could not have come at a worse time. With rising taxes and fuel prices, the government has already caused discontent amongst the people. Add to that the fluctuating market prices and there is already a powder keg present that only needs one catalyst to ignite

One catalyst that could ignite

With over 2.1 million government employees  granted a boost to their salaries,  the government hopes to increase transparency and reduce corruption. However, this doubling of the pay scale may become a catalyst that can start a series of market trends that may eventually cause great economic problems if not tackled and addressed immediately.
With Eid al-Adha approaching, prices of goods, especially prices on the kitchen markets have begun to steadily rise. Prices of onions are already to a point where a friend of mine jokingly commented that maybe from now on we should bring onions with us when we visit guests instead of sweets. The pay hike poses a credible and serious risk of further increasing the prices.
Historically, Bangladesh always witnessed a hike in prices of various goods and services whenever government pay  increased. Many sellers automatically increase the price of goods and
services not realizing that while the government is a big employer in the nation, it is certainly not the largest. Anticipation of price hike after pay scale elevation also contributes to this  unusual
inflation described as inflation from ‘expectation’.
While this will negate a large portion of the benefits of a higher pay scale, the greatest suffers from such a price hike would be the non-government employees. The worst hit would be the ones working blue collar jobs as well as white collar workers from the lower middle classes.
Let us not forget that the nation is still in a recovery phase; the great number of the general populace are still trying to absorb the economic wounds that were inflicted upon them during the repeated political violence suffered during the last two years. RMG workers, who form the largest privately employed workforce in the nation, were just beginning to reap the benefits of the government set minimum wage scales for them. A hike in prices of goods and services now will result in the total loss of those benefits effectively putting them back to square one.
The RMG factories that employ them will also be unable to further increase wages to adjust to such a scenario, as further increase in prices will result in losing competitiveness in the international markets. The situation would therefore, effectively turn into a deadlock, where workers are unable to secure higher salaries but prices of goods skyrocket, leading to reduced spending power.
 The lower middle class will also suffer greatly, a rise in prices of goods and services will compound the problems of a class that is still highly vulnerable from last year’s turmoil. Rise of prices in the kitchen markets will most definitely cause a chain reaction, causing a rise in house rents, increased public transport costs as well as increase the already high percentage of people living below the poverty line.
To say that such a scenario will not occur would be being too optimistic, as historical records provide adequate data that show rise in prices that are above normal expected levels after each increase in government pay scale. Such a scenario will cause the cost of living to rise and will reduce the standard of living of the affected populace. A highly undesirable situation in a country dependent on the growth of the consumers’ spending power.
Taxation would also increase, the increased salaries for government employees would need sources from which to be paid; thus an increase in various government taxes is to be expected.
The recent taxation of private education on universities, for example has garnered an angry outburst of protest, which only escalated after the recent release of the doubled pay scale. Many are arguing the validity of taxing education to fund government employees while ministers get to import cars without any tariff. The situation has gotten to the point where, as I write this article, students have taken to the streets to protest what they believe is unjust taxation. While the two may not be related, a large part of the general population is already blaming the various new imposed taxes as well as the hike in fuel prices.
The government therefore cannot ignore the situation that may develop from a simple rise in pay scale. The necessary chain reactions could  be too widespread and chaotic to ignore. The only way to prevent such a situation would be for the government to take necessary steps in order to neutralize the threats before these can take root. As it is said in the medical sciences- “Prevention is better than the cure”.
A strict and vigilant market monitoring operation must be initiated by the government, effective immediately, in order to stop prices on the kitchen market from rising beyond what could be called “normal inflation”. Bus fares should also be set and adjusted accordingly in order to ensure that private bus companies are unable to charge unjustifiably high bus fares as well as take precautions to ensure that prices of other consumer goods do not see abnormal price hikes.
The law, concurrent to the monitoring, must also be enforced with extreme diligence. Any negligence on the part of enforcing laws would make all monitoring redundant as well as cause further public fury as they will view the government as incompetent as well as unable to protect the public.
The punishment for unfair pricing must also be severe. If the enforcement is to succeed, the government must ensure that the punishment for unjust pricing is severe enough  so that unscrupulous business persons are discouraged from carrying out such practices. The government cannot afford to have laws in place and then see criminals walk around due to any loopholes in the legal system.
Overall, the government’s declaration to raise the salaries of government employees could not have come at a worse time.  
With rising taxes and fuel prices, the government has already caused discontent amongst the people. Add to that the fluctuating market prices and there is already a powder keg present that only needs one catalyst to ignite.
A strict monitoring by the
government in conjunction with proper control would not only
protect the non-government employees, but will also increase public support for the government, as it will be seen as working for the people and not against it.

The writer is a contributor to theindependent  

 

The government�s declaration to raise the salaries of government employees so amply could not have come at a worse time. With rising taxes and fuel prices, the government has already caused discontent amongst the people. Add to that the fluctuating market prices and there is already a powder keg present that only needs one catalyst to ignite

One catalyst that could ignite

With over 2.1 million government employees granted a boost to their salaries, the government hopes to increase transparency and reduce corruption. However, this doubling of the pay scale may become a catalyst that can start a series of market trends that may eventually cause great economic problems if not tackled and addressed immediately. With Eid al-Adha approaching, prices of goods, especially prices on the kitchen markets have begun to steadily rise. Prices of onions are already to a point where a friend of mine jokingly commented that maybe from now on we should bring onions with us when we visit guests instead of sweets. The pay hike poses a credible and serious risk of further increasing the prices. Historically, Bangladesh always witnessed a hike in prices of various goods and services whenever government pay increased. Many sellers automatically increase the price of goods and services not realizing that while the government is a big employer in the nation, it is certainly not the largest. Anticipation of price hike after pay scale elevation also contributes to this unusual inflation described as inflation from expectation. While this will negate a large portion of the benefits of a higher pay scale, the greatest suffers from such a price hike would be the non-government employees. The worst hit would be the ones working blue collar jobs as well as white collar workers from the lower middle classes. Let us not forget that the nation is still in a recovery phase; the great number of the general populace are still trying to absorb the economic wounds that were inflicted upon them during the repeated political violence suffered during the last two years. RMG workers, who form the largest privately employed workforce in the nation, were just beginning to reap the benefits of the government set minimum wage scales for them. A hike in prices of goods and services now will result in the total loss of those benefits effectively putting them back to square one. The RMG factories that employ them will also be unable to further increase wages to adjust to such a scenario, as further increase in prices will result in losing competitiveness in the international markets. The situation would therefore, effectively turn into a deadlock, where workers are unable to secure higher salaries but prices of goods skyrocket, leading to reduced spending power. The lower middle class will also suffer greatly, a rise in prices of goods and services will compound the problems of a class that is still highly vulnerable from last years turmoil. Rise of prices in the kitchen markets will most definitely cause a chain reaction, causing a rise in house rents, increased public transport costs as well as increase the already high percentage of people living below the poverty line. To say that such a scenario will not occur would be being too optimistic, as historical records provide adequate data that show rise in prices that are above normal expected levels after each increase in government pay scale. Such a scenario will cause the cost of living to rise and will reduce the standard of living of the affected populace. A highly undesirable situation in a country dependent on the growth of the consumers spending power. Taxation would also increase, the increased salaries for government employees would need sources from which to be paid; thus an increase in various government taxes is to be expected. The recent taxation of private education on universities, for example has garnered an angry outburst of protest, which only escalated after the recent release of the doubled pay scale. Many are arguing the validity of taxing education to fund government employees while ministers get to import cars without any tariff. The situation has gotten to the point where, as I write this article, students have taken to the streets to protest what they believe is unjust taxation. While the two may not be related, a large part of the general population is already blaming the various new imposed taxes as well as the hike in fuel prices. The government therefore cannot ignore the situation that may develop from a simple rise in pay scale. The necessary chain reactions could be too widespread and chaotic to ignore. The only way to prevent such a situation would be for the government to take necessary steps in order to neutralize the threats before these can take root. As it is said in the medical sciences- Prevention is better than the cure. A strict and vigilant market monitoring operation must be initiated by the government, effective immediately, in order to stop prices on the kitchen market from rising beyond what could be called normal inflation. Bus fares should also be set and adjusted accordingly in order to ensure that private bus companies are unable to charge unjustifiably high bus fares as well as take precautions to ensure that prices of other consumer goods do not see abnormal price hikes. The law, concurrent to the monitoring, must also be enforced with extreme diligence. Any negligence on the part of enforcing laws would make all monitoring redundant as well as cause further public fury as they will view the government as incompetent as well as unable to protect the public. The punishment for unfair pricing must also be severe. If the enforcement is to succeed, the government must ensure that the punishment for unjust pricing is severe enough so that unscrupulous business persons are discouraged from carrying out such practices. The government cannot afford to have laws in place and then see criminals walk around due to any loopholes in the legal system. Overall, the governments declaration to raise the salaries of government employees could not have come at a worse time. With rising taxes and fuel prices, the government has already caused discontent amongst the people. Add to that the fluctuating market prices and there is already a powder keg present that only needs one catalyst to ignite. A strict monitoring by the government in conjunction with proper control would not only protect the non-government employees, but will also increase public support for the government, as it will be seen as working for the people and not against it. The writer is a contributor to theindependent